Insurance & Reinsurance 2015

ICLG The International Comparative Legal Guide to: Insurance & Reinsurance 2015

4th Edition

A practical cross-border insight into insurance and reinsurance law

Published by Global Legal Group, with contributions from:

Acuña, Sahurie, Hoetz & Cifuentes CMS Advokatfirmaet Steenstrup Stordrange DA Creel, García-Cuéllar, Aiza y Enríquez, S.C. Advokatfirman Vinge KB DAC Beachcroft Colombia Abogados SAS AlixPartners DAC Beachcroft SLPU ALTENBURGER LTD legal + tax Gün + Partners Anderson Mōri & Tomotsune Kyriakides Georgopoulos Law Firm Arthur Cox McMillan LLP Attorneys at Law Borenius Ltd MJM Limited Bedell Cristin Guernsey Partnership Morton Fraser LLP Blaney McMurtry LLP Oppenhoff & Partner Rechtsanwälte Cabinet BOPS Steuerberater mbB Camilleri Preziosi Osterling Abogados Chalfin, Goldberg, Vainboim & Fichtner Studio Legale Giorgetti Advogados Associados Tuli & Co Clyde & Co LLP Willkie Farr & Gallagher LLP The International Comparative Legal Guide to: Insurance & Reinsurance 2015

General Chapters:

1 Proposed Changes to Insurance Contract Law in the UK – Jon Turnbull & Michelle Radom, Clyde & Co LLP 1 2 The Economics of Insurance Markets – Challenges and Change – Mat Hughes & Pablo Florian, Contributing Editors AlixPartners 7 Jon Turnbull & Geraldine 3 Recent Developments in Canadian Privacy Law and CGL Coverage – Lori D. Mountford & Quirk, Clyde & Co LLP David R. Mackenzie, Blaney McMurtry LLP 15 Head of Business Development 4 The New Corporate Governance Framework for Mexican Insurers – Leonel Pereznieto del Prado & Dror Levy Allan Galileo Olmedo Villegas, Creel, García-Cuéllar, Aiza y Enríquez, S.C. 21 Sales Director Florjan Osmani Commercial Director Country Question and Answer Chapters: Antony Dine 5 Bermuda MJM Limited: Jean-Paul (JP) Dyer & Timothy Frith 25 Account Directors Oliver Smith, Rory Smith 6 Brazil Chalfin, Goldberg, Vainboim & Fichtner Advogados Associados: Senior Account Manager Ilan Goldberg & Pedro Bacellar 31 Maria Lopez 7 Canada McMillan LLP: Carol Lyons & Lindsay Lorimer 38 Sales Support Manager 8 Chile Acuña, Sahurie, Hoetz & Cifuentes: Alejandro Acuña & Emilio Sahurie 47 Toni Hayward Senior Editor 9 Colombia DAC Beachcroft Colombia Abogados SAS: Gabriela Monroy Torres & Suzie Levy Camila de la Torre Blanche 52 Editor 10 England & Wales Clyde & Co LLP: Jon Turnbull & Geraldine Quirk 58 Rachel Williams 11 Finland Attorneys at Law Borenius Ltd: Ulla von Weissenberg 67 Group Consulting Editor Alan Falach 12 France Cabinet BOPS: Pascal Ormen & Alexis Valençon 72 Group Publisher 13 Germany Oppenhoff & Partner Rechtsanwälte Steuerberater mbB: Richard Firth Dr. Peter Etzbach, LL.M. 78 Published by 14 Greece Kyriakides Georgopoulos Law Firm: Konstantinos S. Issaias 84 Global Legal Group Ltd. 59 Tanner Street 15 Guernsey Bedell Cristin Guernsey Partnership: Mark Helyar 91 London SE1 3PL, UK Tel: +44 20 7367 0720 16 India Tuli & Co: Neeraj Tuli & Celia Jenkins 96 Fax: +44 20 7407 5255 Email: [email protected] 17 Ireland Arthur Cox: Elizabeth Bothwell & David O’Donohoe 102 URL: www.glgroup.co.uk 18 Italy Studio Legale Giorgetti: Avv. Alessandro P. Giorgetti 109 GLG Cover Design F&F Studio Design 19 Japan Anderson Mōri & Tomotsune: Tomoki Debari & Tomoyuki Tanaka 115 GLG Cover Image Source 20 Malta Camilleri Preziosi: Malcolm Falzon & Tara Cann Navarro 120 Colin/Wikimedia Commons 21 Mexico Creel, García-Cuéllar, Aiza y Enríquez, S.C.: Leonel Pereznieto del Prado 127 Printed by Ashford Colour Press Ltd 22 Norway Advokatfirmaet Steenstrup Stordrange DA: Klaus Henrik Wiese-Hansen & February 2015 Audun Kleppestø 132

Copyright © 2015 23 Peru Osterling Abogados: Enrique Ferrando Gamarra & Marco Rivera Noya 137 Global Legal Group Ltd. All rights reserved 24 Romania CMS Romania: Florentin Giurgea & Horia Draghici 142 No photocopying 25 Russia CMS Russia: Leonid Zubarev & Sergey Yuryev 148 ISBN 978-1-910083-33-8 26 Scotland Morton Fraser LLP: Jenny Dickson 154 ISSN 2048-6871 27 Spain DAC Beachcroft SLPU: José María Álvarez-Cienfuegos & Strategic Partners José María Pimentel 160 28 Sweden Advokatfirman Vinge KB: Fabian Ekeblad & Malin Van den Tempel 166 29 Switzerland ALTENBURGER LTD legal + tax: Melissa Gautschi & Julia Jung-Utzinger 173 30 Turkey Gün + Partners: Pelin Baysal & Bensu Aydin 179 31 Ukraine CMS Ukraine: Olexander Martinenko & Sergiy Gryshko 184 32 USA Willkie Farr & Gallagher LLP: Christopher J. St. Jeanos 189

Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720

Disclaimer This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.

WWW.ICLG.CO.UK Chapter 29

Switzerland Melissa Gautschi

ALTENBURGER LTD legal + tax Julia Jung-Utzinger

1 Regulatory 1.3 Are foreign insurers able to write business directly or must they write reinsurance of a domestic insurer?

1.1 Which government bodies/agencies regulate insurance (and reinsurance) companies? As a rule, foreign insurers carrying out insurance activities in or from Switzerland are subject to FINMA’s authorisation. An insurance activity is deemed to take place in Switzerland if a Swiss-domiciled The responsible regulatory authority in Switzerland is the Swiss individual or legal entity is the policyholder or the insured, or if the Financial Market Supervisory Authority (FINMA). It is in charge insured risk is located in Switzerland (section 1 para 1 ISO). of approving the establishment of (re)insurance companies as well as of their on-going prudential supervision. FINMA also has Exemptions apply to foreign incorporated insurers without statutory supervisory authority over various other financial market establishment in Switzerland that underwrite exclusively the participants, such as banks, securities dealers, collective investment following (direct) insurance risks: marine; aviation; cargo; and schemes and insurance intermediaries. war. For all other lines of business, foreign insurers are not able to write business directly (on a cross-border basis, i.e. without FINMA For social insurance (such as the compulsory health, accident, old authorisation), and may only write reinsurance of a domestic insurer. age, invalidity insurance, etc.), the responsible authority is the Provided that they only carry on reinsurance business in Switzerland, Federal Social Insurance Office. such foreign incorporated insurers are not subject to authorisation (irrespective of whether they are only operating on a cross-border 1.2 What are the requirements/procedures for setting up a basis or through a Swiss branch office; section 2 (2)(a) ISA). new insurance (or reinsurance) company? FINMA requires a domestic ceding (direct) insurer to retain a percentage of the risk it has underwritten, usually at least 10% of its The rules governing insurance supervision are set out in the overall risk exposure. Insurance Supervision Act (ISA) and the Insurance Supervision Ordinance (ISO). Pursuant to section 3 (1) ISA, an authorisation from FINMA is required in order to carry out insurance business 1.4 Are there any legal rules that restrict the parties’ in Switzerland (see question 1.3 below for exemptions). To this freedom of contract by implying extraneous terms end, a local physical presence needs to be established, which might into (all or some) contracts of insurance? consist of either a Swiss legal entity or a Swiss branch office of a foreign insurer. Both types of establishment require registration The parties’ freedom of contract is restricted by certain mandatory with the local commercial register, which takes two to three weeks legal rules that can be found either in general private and/or public from filing a complete application. law statutes (e.g. the Swiss Code of Obligations or the Federal Data Protection Act) or in statutes governing specific types of contracts, From a regulatory point of view, the company must submit an such as the Federal Insurance Contract Act (ICA). application to FINMA including a business plan setting out essentially: the type of business the company intends to write; The ICA, in particular, contains a number of provisions which cannot the proposed corporate structure and organisation of the company be overridden by contract, as, for instance, in relation to excess (including ownership, risk management, any outsourcing, etc.); its coverage and the replacement value (see full list in section 97 ICA). personnel (directors/managers, responsible actuary, etc.); as well Further provisions of the ICA are partially mandatory in the sense as its financial resources and technical reserves (minimum capital, that they may not be overridden to the detriment of the insured. Such organisation fund, solvency requirements, tied assets, financial clauses include the pre-contractual duty of information of the insurer, projections, investment policy, etc.) (section 4 (1-2) ISA). the consequences for the insured of a breach of duty of disclosure and of premium payment default as well as the duties of the insured in The application is based on various standard forms and is usually case of risk increase, etc. (see full list in section 98 ICA). submitted as a discussion draft following which FINMA reverts with feedback and/or additional requests. The authorisation is Finally, contractual provisions may also be deemed unenforceable if generally issued within three months from filing a final version of they are contrary to Swiss public policy. the business plan.

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respect to the insurance cover. However, if the insurer would have 1.5 Are companies permitted to indemnify directors and been entitled to reduce or refuse the cover on such basis, it may take officers under local company law? recourse against the insured. With respect to non-compulsory third party liability insurance, The indemnification by the company of its directors and officers is where no such right of direct action exists, the injured (third party) not specifically addressed under Swiss law. Given the directors’ and has a statutory lien on the insurance benefit, and the insurer is officers’ statutory responsibility towards the company (sections 754et allowed to pay the benefit directly to the injured (section 60 ICA). seq. CO), the question whether indemnification agreements are valid remains the subject of controversy. If at all, only indemnification for negligent acts or omissions would be permissible. 2.3 Can an insured bring a direct action against a reinsurer? It is, however, commonly accepted to have directors’ and officers’ Switzerland liability insurance in place (the company may even pay the concerned premiums). A further option is for another entity, e.g. the The insured cannot bring a direct action against a reinsurer (not parent company or the shareholder(s), to grant the indemnification even in case of insolvency of the insurer). However, the reinsurance for the directors and officers. agreement between the insurer and the reinsurer can provide for the insured’s right to claim payment directly against the reinsurer (“cut through” clause). 1.6 Are there any forms of compulsory insurance?

2.4 What remedies does an insurer have in cases of either There are various forms of compulsory insurance in Switzerland. misrepresentation or non-disclosure by the insured? For instance, liability insurance is required for motor vehicles and other means of transportation (such as aircraft and ships), certain In case of non-disclosure or misrepresentation by the insured, the professions (such as lawyers, doctors and insurance intermediaries), ICA provides for a statutory right of cancellation which has to be and for various types of infrastructure (such as nuclear facilities and exercised by the insurer within four weeks of it becoming aware of gas pipelines). Another typical example is building insurance. the breach (section 6 (2) ICA). If the insurer does not cancel within Compulsory social insurance includes amongst other things basic four weeks, the policy remains valid. Upon cancellation, the insurer health insurance, employee accident insurance, occupational is released from its obligations (including for past insured events pension plan, old age and survivors’ insurance as well as invalidity if their occurrence was indeed influenced by the non-disclosure and unemployment insurance. or misrepresentation). The insured is in turn entitled to claim the premium paid pro rata as from the date of cancellation. 2 (Re)insurance Claims However, the insurer is pre-empted from exercising its cancellation right under the circumstances set out in section 8 ICA (e.g. the insurer was aware or should have been aware of the misinterpretation or 2.1 In general terms, is the substantive law relating to non-disclosure). insurance more favourable to insurers or insureds?

The ICA is a rather “balanced” law in terms of equity between the 2.5 Is there a positive duty on an insured to disclose to insurers all matters material to a risk, irrespective rights and obligations of the parties to an insurance contract. Sections of whether the insurer has specifically asked about 97 and 98 ICA list the various rules applicable to the insurance them? contract that may not be altered in any way (mandatory provisions) or only to the advantage of the insured (partially mandatory provisions) The insured’s pre-contractual duty of disclosure is limited to respectively. Whilst both types of rules restrict the parties’ freedom questions specifically raised in writing by the insurer (section 4 ICA). of contract, they do not systematically favour the same party. Although many mandatory provisions are indeed more favourable to the insured, a number of them are rather insurer-friendly. 2.6 Is there an automatic right of subrogation upon payment of an indemnity by the insurer or does an This can be partly explained by the fact that the existing version insurer need a separate clause entitling subrogation? of the ICA is over 100 years old and thus dates back to a time of a lesser consumer protection awareness. A few provisions of the ICA The ICA only provides for a statutory right of subrogation in the have, however, been introduced and/or amended in the past 10 years context of non-life insurance and where the claim against the third that increase the insureds’ rights. Where necessary, adjustments party is based on tort (section 72 ICA). However, jurisprudence have also been made by the courts through their interpretation of the also admits a right of subrogation for contractual claims in cases of provisions of the ICA. gross negligence. If subrogation arises, the right to claim against the third party passes 2.2 Can a third party bring a direct action against an ex lege to the insurer, who may then bring the claim in its own name. insurer?

As a rule, and unless provided for in the insurance contract, a third 3 Litigation - Overview party does not have a direct claim against the insurer.

Some statutory exceptions apply, mainly in the context of 3.1 Which courts are appropriate for commercial insurance compulsory liability insurance policies, such as, for instance, with disputes? Does this depend on the value of the regard to motor vehicles, nuclear facilities and gas pipelines. In dispute? Is there any right to a hearing before a jury? case of such direct third party action, the insurer is prevented by law from raising any defences based either on the policy or the ICA with International jurisdiction is subject to the Lugano Convention and/

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or Switzerland’s Federal Code on Private International Law (PIL). the courts do have the power to order parties and non-parties to Regarding contractual claims between domestic parties, the courts produce certain documents. But, the courts will only do so if the of the canton of domicile/registered office of the defendant or of the requesting party describes and identifies each requested document place where the characteristic performance must be rendered have in sufficient detail and if such document is reasonably believed to jurisdiction (section 31 Civil Procedure Code (CPC)). The insurance exist. In other words, “fishing expeditions” are not permitted and companies must perform their contractual duties – the characteristic the content of the requested document should be relevant to the case. performance – at the domicile/registered office of the policyholder The CPC lists what it deems valid reasons for parties and non-parties or insured (section 46a ICA). Furthermore, insurance policies can, to refuse cooperation in the taking of evidence (sections 163 and under certain circumstances, qualify as consumer contracts. In these 165 et seq. CPC). If a party refuses to produce documents without cases, the courts of the canton of domicile/registered office of one of valid reasons, the court shall take this into account when appraising the parties are competent for actions brought by the consumer (the the evidence (section 164 CPC). If a non-party refuses to produce Switzerland policyholder or the insured) and the courts of the canton of domicile documents without justification, the court may, among other things, of the defendant are competent for actions brought by the insurance impose a disciplinary fine of up to CHF 1,000 (section 167 CPC). company (section 32 CPC). Under certain circumstances, production of documents can be The law of the canton in which the claim must be filed – in accordance ordered by the courts even prior to the commencement of the main with the above stated – determines which cantonal court(s) has/ proceeding (section 158 CPC). have jurisdiction over the concerned commercial insurance dispute (section 4 CPC). The answer to the present question, thus, depends on the canton in which the claim must be filed. 4.2 Can a party withhold from disclosure documents (a) relating to advice given by lawyers or (b) prepared Usually, there are two cantonal instances and, depending, inter in contemplation of litigation or (c) produced in the alia, on the amount in dispute, one federal instance. Furthermore, course of settlement negotiations/attempts? litigation generally has to be preceded by an attempt at conciliation before a special conciliation authority (see also question 4.10 et seq. Parties and non-parties to an action are not under the obligation to below). There is no jury system in Switzerland. Four Swiss cantons produce documents constituting correspondence (including draft have designated a special court which, under certain circumstances, contracts and settlement proposals, memoranda, personal notes, etc.) has jurisdiction as sole cantonal instance for commercial (insurance) between them and a lawyer, who is entitled to act as a professional disputes (the so called “Commercial Court”). The preconditions for representative, or a patent attorney (section 160 CPC). the jurisdiction of these Commercial Courts are that: (i) the dispute relates to the commercial activity of at least one of the parties; (ii) the amount in dispute is of at least CHF 30,000; and (iii) at least 4.3 Do the courts have powers to require witnesses to give evidence either before or at the final hearing? the defendant is registered in the Swiss Commercial Registry or an equivalent foreign registry (section 6 CPC). The duty to render a truthful testimony is a general civic duty in In case suit gets filed with a court in the “wrong” canton, the seized Switzerland (section 160 CPC). Witnesses domiciled in Switzerland court has jurisdiction if the defendant enters an appearance on the can, therefore, be summoned by the Swiss courts. Again, they have, merits without objecting to the court’s jurisdiction (section 18 CPC). under certain circumstances, the right to refuse cooperation (sections Consumers can, however, neither by advance agreement nor by 165 et seq. CPC). If they refuse to testify without justification, the entering an appearance on the merits waive the jurisdiction provided court may, inter alia, order the use of compulsory measures or for in section 32 CPC (section 35 CPC). impose a disciplinary fine of up to CHF 1,000 (section 167 CPC). If witnesses domiciled abroad do not voluntarily testify, the proper 3.2 How long does a commercial case commonly take to procedure for judicial assistance must be applied. bring to court once it has been initiated?

An average commercial case commonly takes up to two to three 4.4 Is evidence from witnesses allowed even if they are not present? years to reach a first instance judgment. Obviously, this time span varies depending, among other things, on the canton, the court and especially the proceeding in respectively under which the claim is In principle, witnesses are required to testify in front of the judges filed. Also, the complexity of the case and the parties’ behaviour can in person. They cannot choose to make a written statement. If a have a great impact on the time needed. witness is sick the court hearing can be postponed. Furthermore, under certain circumstances, a witness may be questioned at his/ her place of residence (section 170 CPC). Only exceptionally may 4 Litigation - Procedure the courts obtain information in writing from individuals if the formal examination of a witness seems unnecessary (section 190 CPC). However, information obtained in writing by the courts does 4.1 What powers do the courts have to order the not have the same evidentiary value as an oral testimony. Note disclosure/discovery and inspection of documents in furthermore that, by Swiss standards, written witness statements respect of (a) parties to the action and (b) non-parties to the action? obtained by the parties can even decrease the evidentiary value of a subsequent oral testimony of the concerned witness. The CPC does not provide for a standard discovery procedure as is known in common-law jurisdictions. Each party basically only 4.5 Are there any restrictions on calling expert witnesses? submits the documents that support its case. Is it common to have a court-appointed expert in addition or in place of party-appointed experts? However, parties and non-parties have a procedural duty to cooperate in the taking of evidence, and therefore, under certain Party-appointed expert opinions are not covered by the CPC. circumstances, to produce documents (section 160 CPC). Hence,

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Parties can, in principle, submit as many party-appointed expert opinions as they deem necessary. However, the evidentiary value 4.8 Is interest generally recoverable in respect of claims? of such opinion is considerably lower than that of a court-appointed If so, what is the current rate? expert. The party bearing the burden of proof should, therefore, always request the court to appoint an independent expert. Yes, a debtor in default must generally pay an interest rate of 5 per cent per annum (section 104 Swiss Code of Obligations). The courts may obtain an expert opinion about issues of fact from one or more independent court-appointed experts at the request of a party or ex officio (section 183 CPC). If a court lacks the required 4.9 What are the standard rules regarding costs? Are technical knowledge for a case and if one of the parties requests an there any potential costs advantages in making an expert opinion, the court should generally obtain one in order not offer to settle prior to trial? to violate the concerned party’s right to be heard. However, the Switzerland assessment of the evidence and the legal analysis of the case always At the very beginning of the proceedings, the courts usually demand remain within the competence of the court. an advance payment from the plaintiff up to the amount of the expected court costs and, at the request of the defendant, the plaintiff Experts must be independent and prior to their appointment the must, under certain circumstances, provide security for party costs court must give the parties the opportunity to comment on the (sections 98 et seq. CPC). suggested expert – or to suggest experts themselves – as well as on the proposed instructions/questions (sections 183 and 185 CPC). At the end of the proceedings, the court and party costs are usually charged to the unsuccessful party or, if no party entirely succeeded, With the authorisation of the court, the expert may carry out his/her the costs are allocated in accordance with the outcome of the case own inquiries (section186 CPC). An expert can, therefore, even meet (section 106 CPC). The courts have a certain discretion regarding with a party ex parte (e.g. if an expert medical doctor has to assess the the allocation of costs (section 107 CPC), thus, there might be a – health state of a party). However, at the request of a party or ex officio, but in most cases probably is no – cost advantage in making an offer the court may order that the expert’s inquiries be carried out once more to settle prior to trial. in accordance with the rules on taking evidence (section 186 CPC). The quantum of the costs is set out in cantonal tariffs (section 96 Ultimately, the courts are not bound by expert opinions, but form CPC) and mainly depends on the amount in dispute. their opinion based on their free assessment of the evidence taken (section 157 CPC). The party requesting the court to obtain an expert opinion has to 4.10 Can the courts compel the parties to mediate make an advance payment (section 102 CPC; see question 4.9 disputes? If so, do they exercise such powers? below regarding the final allocation of costs). Generally, litigation has to be preceded by an attempt at conciliation before a special conciliation authority or – if all the parties so 4.6 What sort of interim remedies are available from the request – an attempt at mediation with a private mediator (section courts? 197 and section 213 CPC). Usually, therefore, the claimant can only submit its statement of claim to the competent court together In case the applicant credibly shows an (anticipated) violation of with the “authorisation to proceed”, i.e. a document issued by the his/her rights which threatens to cause not easily reparable harm, conciliation authority in case no agreement is reached in conciliation the courts may order any interim measure suitable to prevent this or in mediation (sections 209 and 213 CPC). imminent harm: e.g. an injunction, an order to remedy an unlawful However, conciliation and mediation proceedings do not have to be situation, an order to a registry authority or to a third party or an held if, among other things, one of the four cantonal Commercial order to make a performance in kind (sections 261 et seq. CPC). Courts is competent (section 198 CPC). Moreover, under certain circumstances, a creditor can also apply During court proceedings the courts can, at any time, recommend for a freezing order with regard to its debtor’s assets in order to mediation to the parties (section 214 CPC), however, Swiss courts secure payment (section 271 of the Swiss Debt Enforcement and never compel parties to mediate commercial disputes. Bankruptcy Act).

4.11 If a party refuses to a request to mediate, what 4.7 Is there any right of appeal from the decisions of consequences may follow? the courts of first instance? If so, on what general grounds? How many stages of appeal are there? There are no consequences for refusing a request to mediate. As described under question 3.1 above, there are usually two cantonal If the defendant does not appear at the conciliation hearing before the instances and – depending, among other things, on the amount in special conciliation authority, the latter proceeds as if no agreement had dispute – one federal instance. In Switzerland, there are, therefore, been achieved and issues the “authorisation to proceed” (Art. 206 CPC). generally two (one cantonal and one federal) stages of appeal. In case one of the four cantonal Commercial Courts is competent as first instance, there is only one (federal) stage of appeal. 5 Arbitration Appeals may be filed on grounds of incorrect application of the (Swiss federal) law and/or (obviously) incorrect establishment of 5.1 What approach do the courts take in relation to the facts (sections 310 and 320 CPC and sections 95 et seq. Swiss arbitration and how far is the principle of party Federal Supreme Court Act). autonomy adopted by the courts? Are the courts able to intervene in the conduct of an arbitration? If so, on what grounds and does this happen in many cases?

Switzerland is a very arbitration-friendly jurisdiction and a party to

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the New York Convention (NYC). In case the seat of arbitration The forms of interim relief available before Swiss state courts are is in Switzerland, either the 12th chapter of the PIL or the 3rd part the ones set out under question 4.6, first paragraph, above. Interim of the CPC is the law governing the arbitration, depending on relief also includes orders to preserve evidence. However, Swiss whether at least one of the parties was domiciled or resided outside state courts do not order injunctions against starting litigation in of Switzerland at the time the arbitration agreement was concluded. contravention of an arbitration clause. Both sets of law and, therefore, Swiss courts widely accept the principle of party autonomy. For instance, the parties are free to 5.5 Is the arbitral tribunal legally bound to give detailed choose the law applicable to their contract (section 187 PIL and reasons for its award? If not, can the parties agree section 381 CPC), to control the composition of the arbitral tribunal (in the arbitration clause or subsequently) that a (section 179 PIL and sections 360 et seq. CPC), and they can directly reasoned award is required? or by reference to (institutional) rules regulate the arbitral procedure Switzerland as long as their equal treatment and their right to be heard in an According to section 189 PIL and section 384 CPC, an arbitral adversarial proceeding are guaranteed (section 182 PIL and section award must be in writing and shall state the reasoning upon which 373 CPC), etc. If the parties are unable to agree, e.g. on procedural it is based – unless the parties have explicitly dispensed with this issues or the appointment of an arbitrator, fallback provisions exist. requirement. The assistance of local courts can be requested with regard to the However, the fact alone that an award fails to state the reasons by appointment, challenge, removal and replacement of the arbitrators, which it is supported, although the parties have not waived such the taking of evidence or any other procedural act of the arbitral right, is, according to the Swiss Supreme Court, neither reason tribunal, interim relief as well as the challenge of arbitral awards enough to annul the award nor to prevent its enforcement (BGE 130 (albeit only on very limited grounds, see question 5.6 below) and, III 125 E. 2.2). last but not least, with regard to the recognition and enforcement of arbitration agreements and foreign arbitral awards. 5.6 Is there any right of appeal to the courts from the decision of an arbitral tribunal? If so, in what 5.2 Is it necessary for a form of words to be put into a circumstances does the right arise? contract of (re)insurance to ensure that an arbitration clause will be enforceable? If so, what form of words According to section 190 PIL and section 393 CPC, an arbitral is required? award can only be challenged if: ■ the arbitral tribunal was composed in an irregular manner; With regard to the enforcement of arbitration clauses, Swiss courts are bound by section II(3) NYC (see also section 7 PIL and section ■ the arbitral tribunal erroneously held that it had or did not 61 CPC). Thus, no specific wording other than that contained in have jurisdiction; the well-established model arbitration clauses (e.g. as suggested by ■ the arbitral tribunal ruled on matters beyond the claims arbitral institutions or the UNCITRAL) is needed. submitted to it or if it failed to rule on one of the claims; ■ the principles of equal treatment of the parties or the right to be heard were violated; 5.3 Notwithstanding the inclusion of an express arbitration clause, is there any possibility that the ■ the award is incompatible with Swiss public policy (only courts will refuse to enforce such a clause? PIL); ■ the award is arbitrary in its result because it is based on As long as the agreement to arbitrate is in writing (section II(2) NYC, findings that are obviously contrary to the facts as stated in section 178(1) PIL and section 358 CPC), parties can either agree the case files or because it constitutes an obvious violation of on an arbitration clause before any dispute has arisen or conclude a law or equity (only CPC); and/or submission agreement after a specific dispute has actually arisen. ■ the costs and compensation fixed by the arbitral tribunal are With regard to international arbitration, all pecuniary claims obviously excessive (only CPC). (section 177 PIL), and with regard to domestic arbitration, any claim If neither party is domiciled, resides or has a place of business in over which the parties may freely dispose (section 354 CPC), can be Switzerland the parties may waive the right to appeal by an express submitted to arbitration. declaration in the arbitration agreement or in a subsequent written agreement (section 192 PIL). 5.4 What interim forms of relief can be obtained in support of arbitration from the courts? Please give examples. Acknowledgment The authors would like to thank Sophie Winkler, Associate in the State courts are – even when the arbitral tribunal is not yet constituted Insurance Team of ALTENBURGER, for her co-authorship of this – cumulatively, alongside the arbitral tribunal authorised to grant publication. interim relief (section 183 PIL and section 374 CPC and related doctrine). Furthermore, the arbitral tribunal can request the assistance of the state courts if the party concerned does not voluntarily comply with interim measures ordered by the arbitral tribunal.

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Melissa Gautschi Julia Jung-Utzinger ALTENBURGER LTD legal + tax ALTENBURGER LTD legal + tax Seestrasse 39 Seestrasse 39 8700 Küsnacht-Zürich 8700 Küsnacht-Zürich Switzerland Switzerland

Tel: +41 58 810 22 22 Tel: +41 58 810 22 22 Fax: +41 58 810 22 25 Fax: +41 58 810 22 25 Email: [email protected] Email: [email protected] URL: www.altenburger.ch URL: www.altenburger.ch

Melissa is Co-Head of the Insurance Team and member of the Banking Julia has been an Associate with ALTENBURGER since 2012 and a Switzerland and M&A Teams. Her practice focuses on the insurance industry as member of the Dispute Resolution Team. She specialises in domestic well as on banking and finance matters, particularly investment funds. and international litigation, arbitration and mediation. She has experience representing clients in complex, international, commercial She has extensive experience advising Swiss and foreign (re)insurers, litigation and arbitration cases, predominantly in the fields of banking captive reinsurance companies and intermediaries on the full range and finance, contracts, insurance, post-M&A and various other matters. of legal and regulatory aspects in Switzerland and Liechtenstein, Her expertise also includes being secretary of arbitral tribunals under including: the Swiss and the ICDR Rules as well as being counsel in mediations. ■■ licensing, de-licensing, run-off; During her post-graduate studies at the Straus Institute for Dispute Resolution in California she was a volunteer mediator at various Los ■■ portfolio transfer, cross-border business; Angeles Superior Courts. ■■ M&A; ■■ business (re)structuring (distribution, cooperation, outsourcing, etc.); ■■ policy documentation (life, non-life); and ■■ regulatory defence. With 20 years’ experience in the insurance industry, Melissa began her professional career as an in-house legal advisor with a Swiss insurance company, prior to joining the insurance team of ALTENBURGER in 1998 and becoming a partner in 2007. In 2001- 2002 she was seconded to the insurance team of a major international law firm in London.

ALTENBURGER LTD legal + tax has a leading Swiss practice advising insurance sector clients on the full range of legal issues arising in this industry. Our offices in Zurich, Geneva and Lugano offer comprehensive legal advice to Swiss and international insurance and reinsurance companies, underwriters at Lloyd’s, insurance intermediaries as well as providers of insurance-related products. We also assist trading as well as industrial companies in relation to their (re)insurance captive solutions. The firm advises on mergers and acquisitions, business (re)structuring and outsourcing and provides advice on regulatory and compliance matters both in Switzerland and Liechtenstein. We further have extensive expertise in insurance contract law and product development as well as in the negotiation and drafting of industry sector agreements between insurance and/or other financial services companies (including distribution, cooperation and service agreements). We also act as counsel and represent clients before the courts, arbitral tribunals and in mediation as well as in FINMA proceedings.

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